Dave!

On tv the other morning.....this guy was buying his 56th property (at auction). He rents them all out - but how do you fund that many?
Is it one big (ever growing) loan?
Is there no limit on the number of buy to let mortgages a person can have?

Apparently he wasn't rich to start with, in fact he says all his previous money making schemes failed. Let's say each property makes £100 profit each month (plus the rise in value on each) and he isn't doing too badly!

How's he done it?

D.

Wish

iTrader: (2)

I would guess that its all Risk.
Good while the market is good but could end up with nothing. The domino effect.

stevebt

iTrader: (8)

me mate has a few properties and its called "rolling finaces" once have a few properties the banks are more than happy to lend you the money as each property pays for the other etc so in fact you have more cash every time. plus if you default they have all your properties to collect on. its a win win situation for banks

fast bloke

All you need is 20k to get started. You have your main property and your income. 20k deposit gets you your first BTL. Rental excess (usually not very much) + equity on own house gets you second BTL. Save a few quid and rental excess + deposit + good history gets you third BTL. After this it is plain sailing. You are now an established landlord and lenders are falling over to give you money. As a broker and property owner I have had one of the major BTL lenders recently twisting my arm to borrow a million quid @ 4% to invest in BTL. They know how much business I put their way and how much they pay me for that, and that I know the BTL business and know how to make a living at it. At the minute I don't want to take the risk on such a large sum - you only need two or three bad tenants and it all goes pear shaped (see thread about non paying tenants,) but i will probably do it in another 2 years. Basic plan is to double the number of properties each year based on the above, so it would really only take 6 years in the market to hit 56 properties. ( I work with people who have been doing it for 15 years and own in excess of 100 properties - one guy owns 124 houses outright - say the average rental is £300.00 a month )

47 NAT

I saw that as well. It would be nice to make 20% profit within 6 months. I take it he wasnt impressed with the neighbours on one side for delaying his plans and having to get planning permission just to change windows I'd like his money though

Nath

Kevin Groat

Saw the programme before as well. Something he did as well was he bought the properties in areas that weren't expensive - sure the one he bought was somewhere around Newcastle, ex council property. Once you've set up a business and can demonstrate you're making profits, borrowing becomes much easier. Other strange thing was he never looked at any of the properties, they were all bought from auction catalogues......Think he said he bought his first property in 94 or 96. Pretty laid back chap I reckoned.

Dave!

Thanks for the replies.
Fast Bloke....A good explanation thanks. So basically after a 2 or 3 buy to lets you're pretty safe to approach the banks for a loan each time you buy another.
I'm currently working on my second property development (just houses) which i'm selling on for profit (hoping to do this full time now) but the plan is that next year i'll buy one outright for cash and let it out.
Then, as you say i can use the equity in that one to fund the other 55!
This way i can keep our house safely out of the whole scheme.

D.

STi VII

Going on the reports in todays media he had better sell up his 56 propertys quick as there is going to be a crash with prices dropping by as much as 45%!
Since 2001 there has been more buy to let mortgages than first time buyers, and this year is going to see the bubble burst.

davyboy

....and let me guess STi, you don't own a property?

milo

thats what people have been saying for a LOT of years.

Dave!

Even during the last so called 'house price crash' the value of the smaller properties in our area (2/3 bed terraces/semis) never fell. All that happened was that the market slowed down and the values remained static for a while.

I suspect that the larger properties may take a small hit but as i only deal in the smaller ones (So far anyway) i'm not going to worry too much. It would probably result in me taking longer to sell which would negatively affect any profit as there would be more loan payments.

D.

ProperCharlie

i would be very surprised if prices dropped by 45%. Even if they do drop a bit, it will only affect people who have bought recently and have to sell for some reason. everyone else will just carry on as they are.

mattstant

Hmmm some serious Bull**** being spread on this thread now.
I didnt watch the programme but it is a familiar story

45 % drop in house prices dont make me laugh i might get a hernia

The papers Love these headlines and thats all they are some ridiculously rarified property markets in london and the south may suffer a fall but the affect to the average joe will be nothing more than a slow down or stagnation in the market.
during the last Negative equity crisis nearly all those in trouble had borrowed to the hilt 100 % mortgages and a 10 % drop meant they just couldnt afford to move untill prices picked up again.

this time round the bogey man is self certification and those who have gone this route and claimed twice their salary will hopefully get all they deserve. Again the problem isnt whole scale bankruptcy but a slow down in the market and possible stagnation.

jjones

45% drop in house prices

gunna buy me a fistfull of them and then flog them when they go up 45% in the following 5 years

supply and demand innit. population rising faster than houses being built. banks willing to lend silly multipliers on salaries and desperate people ready to take the risk. this time last year and the year before house prices were set to tumble

scoobynutta555

Not so in Luton. I bought my first house in 1992 for £27,500 a 3 bed terrace that was bought by the previous owner for £80,000 in 1991. It is now worth about £120,000.

I have 2 houses now, but i did buy a 3rd on a few years back and sell it after about 3 years. In the past 4-5 years house prices have rocketed up, and IMHO they are too expensive now for proper gains in buy-to-let.

I have a mortgage of £35,000 on two houses worth a total of £240,000. I could easily up my gearing and borrow a load of money to finance more properties. But I have managed 3 properties as well as a full time job, and it can be a real pain in the ***.

Rents havent really changed that much in the last decade around here due to massive rise in buy-to-lets, and I think theres going to be a major fallout in the housing market sooner rather than later. The signs are the same as last time around with the % house price to earnings the highest they have ever been. First time buyers simply cannot afford anything, a sure sign that houses are too much.

Remember, up til the last bust in house prices they were always saying that there would be no bust, literally prices nearly fell in half. Ill admit that interest rates are lower than they were a decade ago, but they are on the way up. This might be enough to put matey with his 56 houses and the rest of his kind in the red and the banks come calling. Sudden releases of property like that in local areas will collapse the local prices, leading to a downturn. People hoping to make a fast buck borrowing up to 80% of their properties are mugs in this current climate IMHO.

Think the big cause of this boom is the mortgages they dish out on self declared earnings. This process I thuink will prove to be the major reason for the boom and its bust, and it will bust.

People are forgetting the intensity of the last bust.

mattstant

Fast bloke you have a private message

Butkus

I hope house prices drop through the floor - my brother has 4 houses mortgaged to the hilt, and he's the scum of the earth.

mattstant

You can always quote an exception scoobynutta and as far as the second statment goes I for one New it would end in tears.
I was site agent at the time (site foreman) and would regulary be greeted on site at 8am buy desperate buyers wanting to buy A house any house regardless of cost and the cost to our business was 2 years stagnation and would have been bankruptcy had we not prudently invested profits elsewhere.

This is a very good article about the 1990 crash and points out the main triggers and causes.

http://users.aber.ac.uk/arh/inaugura...ural.html#Boom

Iam not suggesting there wont be a down turn in fact i think there HAS to be i just dont think it will be anywhere near as bad as 1990

STi VII

I purchased my first house for £60K it was 11 months old and had cost the initial purchaser nearly £95K for a brand new build. Now 10 years later the same house is worth £175K. Average earnings are £22K! do the maths it don't take a genious to work it out. Last time the North carried on booming while the South stagnated for about a year and then POP! it all came tumbling down. The warning signs are there again.

Earlier on I watched something on BBC1 about buying houses at auction. One guy purchased a bungalow without viewing it or having a survey done! If this is the mindset of the Buy to Let landlords/self cert people, they are going to get a rude awakening.

scoobynutta555

That's not an exception, it was the rule at least locally to Luton. The masses of for sale boards that were everywhere was unreal. Luton was the reposession town in the country with a very high amount of repossessions to properties. I viewed several properties in the town at the time, and they were all without exception about half the price they were a year ago (1991).

The second house I bought was for £27,500 and that was over £70,000 the year before as well.

I should imagine this town wasn't the only one to see catastrophic losses and vast negative equity.

Think you'll find approx half value loses of a property were commonplace rather than being 'exceptions'. The knock on was for several years with prices only going up in large amounts since 1998.

davyboy

I imagine he wanted the land to build on.

mattstant

Apparently National figures were 8 % of home buyers in negative equity and while Luton may not be central London it is certainly within easy striking distance and probably suffered dispproportiantly to the rest of the country as a result.
Certainly here in the Midlands there were no losses anywhere near 50 % .

I bought a tiny 2 up two down terrace in derby for 15000 in1987 did minimal work and its value doubled to 30000 almost overnight and then dropped to 27000 for which i sold it.

Dont forget that the housing market was very low across the country in the early 80s and we UP North had alot of catching up to do

mattstant

LMAO exactly what we did a couple of years ago bungalow was 170,000 flattened it and got a clean site for 200,000 built two 4 bed detached for build cost of around 100,00 each and sold each one for 360,000 a piece and made ....well you do the sums

Dave!

Glad i started this thread now! Some interesting stuff particularly on the localisation issue. There's probably someone in the Luton area who's made a fortune buying up when they took the big hit and selling recently then..

D.